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AirAsia Close To Signing New Aircraft Deal

AirAsia plans to place an order soon for 100 narrow body aircraft to aid its international expansion.

The airline is almost ready to sign a deal, AirAsia Group CEO Tony Fernandes told reporters in Jakarta on Sept. 18. “We’re getting closer to an order for 100 aircraft. It’s not there yet,” he said. “We certainly feel that we need the aircraft.”

It is understood that Airbus, with its A320 and A320 NEO, is the front-runner in the competition because AirAsia already operates an all-Airbus fleet. But Fernandes - possibly in an effort to extract a better price from Airbus - has in recent months talked up the potential of the 160-seat BombardierCS300.

Thai AirAsia CEO Tassapon Bijleveld tells AviationWeek the rationale behind an additional order is that the group needs more aircraft for its overseas affiliates.

AirAsia’s first order was for 175 A320s and the second order, placed last year, was for 200, says Tassapon. But the group has already received many of the aircraft from the first order and the aircraft in the second order are largely to replace the aircraft from the first order, he says, adding that AirAsia has a policy of retiring aircraft after 12 years.

A new order is needed for fleet expansion because since it placed the second order, the group has launched airlines in Japan and the Philippines, Tassapon says.

AirAsia also agreed in July to buy Indonesia’s fourth-largest airline Batavia Air and replace its fleet of old Boeing 737s with new Airbus narrow body aircraft. Some aircraft lessors, however, say it will be many years before Batavia has an all-Airbus fleet, because companies that leased 737s to Batavia will be unwilling to let the airline break the leases. Aircraft are usually leased to airlines for 8-10 year terms.

Thai AirAsia, meanwhile, plans to increase its fleet this year to 27 A320s from 24, says Tassapon. In 2016 it aims to have a fleet of 48, which means adding five or six aircraft per year, he says.

Slot constraints at Asian airports are leading some low-cost carriers, such as the Philippines’ Cebu Pacific Air, to switch to the higher capacity A321, but Tassapon says the A320 is better for Thai AirAsia’s needs. He says the airline could fill A321s in peak season but in low season it needs something the size of an A319, therefore the A320 is the best compromise.